Abstract
Abstract This paper develops a lobbying-by-firms model that draws on a more realistic characterization of the lobbying process; influence-seeking requires both money to ‘buy access’ and managerial time to ‘utilize access’. This, more realistically grounded, modeling approach furnishes theoretical support for why one encounters different numbers of lobbying firms of varying sizes in different industries, without casting the (unrealistic) lifeline of the ‘money-buyspolicies’ assumption or (unrealistically) casting out the role of money from the lobbying process. Theoretical legs are also furnished for the empirical finding of a negative and statistically significant (at the 1% level) relationship between industry concentration and “direct lobbying” by the industry. Additional insights emerge from the model regarding how a cap on the lobbying-contributions of firms results, in fact, in an expansion of the amount of access-time purchased by some firms, and how a decline in the world price of an industry’s good can generate greater inequality in access to politicians.
Highlights
Lobbying is an integral part of economic policymaking
When we examine the influence of an industry‘s firm-size distribution on its lobbying effort, a mean-preserving, more unequal size distribution of firms is shown to result in a lower
When we evaluate an entire industry‘s lobbying reaction to an exogenous price change, we find that a decline in the world price raises the industry‘s total lobbying
Summary
Lobbying is an integral part of economic policymaking. In the United States, the First Amendment to the Constitution lays the legal foundation for individuals and groups to ―petition the government for a redress of grievances.‖ The recent economic literature on economic policy making has accounted for the influence of lobbying groups to explain governments‘ choices ofactual‘ as opposed tosocially-optimal‘ policies. Empirical evidence of monetary contributions is strong.. Empirical evidence of monetary contributions is strong.1 The assertion that they buy policies, has been seriously disputed. Policy-drafting legislators possess far less information than firms affected by these policies. Paying money in return for policies is clearly illegal; and, at least in the United States, there is evidence of reasonably consistent law enforcement.. Representatives of industries or firms regularly meet with legislators, give them information, and even play a role in drafting legislation. This access to legislators, is not free.. This access to legislators, is not free.4 It is gained by making monetary contributions This access to legislators, is not free. It is gained by making monetary contributions
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